Get the tools you need to analyze, evaluate and recommend specific actions organizations can take to grow their value and avoid common growth pitfalls. Learn to determine how best to build value, whether by scaling existing markets, entering established markets or creating new markets through innovation and acquisitions.

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It would be helpful to be able to see the progress on the peer reviews to know how many have been completed, as we wait for the final grade to be posted.

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This is a solid strategy course where you'll learn about grown through scaling, new market entry, acquisition, innovation and performance excellence.

From the lesson

Growth through Innovation

Introducing new ideas, processes, and products that disrupt the market is another common growth strategy. In this module, we'll unlock the keys to innovation, from building an innovative capability to appropriating value from innovation to determining an innovation strategy. Using the Real Options Analysis tool, we'll show you how to grow through innovation and good practices for doing so. The Intel Corporate Venturing case provides an opportunity for you to practice this tool and apply course concepts to a real-world scenario.

Taught By

Michael Lenox

Jared Harris

Transcript

When we think about strategies for innovation, it's useful to think about two generic approaches to innovation. The first is what we might call an innovator's strategy, or a first-mover's strategy, and is probably what we think about when we think about innovation strategies. This is the idea of creating new products and services. Going out, capturing some valuable market position, and then using your capabilities to defend that position from rivals here. Alternatively, it could be simply continually innovating in a way to capture these temporary economic profits that might exist from a new innovation that exists. However, it's important to point out there's another strategy, as well, which we might call a fast follower or second-mover strategy. In a fast follower strategy, you can avoid some of the costs and risks of being the innovator. Maybe you can imitate some of the first movers out there, and then you can leverage other complimentary capabilities to out-compete rivals. Think about Microsoft. Throughout their history, they've been famous for taking ideas that maybe have been innovated other places, but then incorporating them quickly into their products and services, and then advancing them even further. Even Apple with their iPod, was a device that came out years after the initial innovators in the market, such as the Rio digital music player. So when you think about innovation strategies, you need to be asking yourself, is it better to be the first-mover, or is it better to maybe be a second-mover? We can look at industry examples back in history, and you can see that there are differences, and different outcomes, and different scenarios. Here we have data from the disk drive industries, specifically, from the 1980s. We have two generations here. The old floppy disk of 5.25, and then eventually the smaller floppy disk of 3.5. Two of the dominant players in that industry were Seagate and Quantum. In both of these industry segments, Seagate was the first-mover. In the case of the 5.25, as you can see from the data, this is sales data here for both of the companies over time. We see that that initial advantage persisted for Seagate, and eventually, they were able to basically dominate the 5.25 market. In the second phase, the 3.5 market, Quantum was also a second-mover, but a slightly less behind than Seagate when they originally introduced. And you can see that Quantum was able to eventually overtake Seagate in sales and eventually dominate that segment. So which strategy is best? Well, it depends. It depends first on whether a firm has an innovative capability to begin with. Are they able to come up with these new products and services? Second, and very important, we have to think about the firm's ability to appropriate the gains from innovation. By this, we mean the ability to maintain some margins after they innovate before perhaps others imitate them. This combination of innovation and appropriability are critical when trying to execute an innovation strategy. Sometimes people define innovation as invention plus commercialization. I like to think of innovation as creativity plus appropriability. Creativity may be a necessary condition, but it's not sufficient. If you can't appropriate the gains from that innovation, from that initial idea, then you're not gonna be a true innovator within an industry.

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